Welcome to another edition of the Chicks on the Right podcast, where we talk
to our BFF and sponsors, Zach Abraham from Bulwart Capital Management, who always
gives us fantastic advice and information about what's going on in the financial world and
in the markets and all of those things. And Zach, today we're a
little freaked out. So the world feels like it's ending. We just watched
that horrible Barack and Michelle Obama show on Netflix, Leave the Lead, the
World Behind or something. Have you seen? No, No, don't watch
it. Just down Okay, don't tell all your friends to stay away from
it. Just don't watch it. It's just horrible. But it's one of
those apocalyptic dystopian like everything is falling apart, the world is ending kind of
movies, and so, you know, you see something like that, it
kind of puts you on edge for a few days. And one of the
things that we talked about together before we went live in our own podcast this
morning was just how like uneasy we're feeling, and that extends to our sort
of financial world as well. And so something that I did, like I
don't know a year ago, I think at this point was I got this
Burr where I was like, I have to withdraw money from the bank and
just have it in cash in a safe in my house. And I did
that, and so then that got us to talking. What is your advice
for helping people prepare for disaster's financial Yeah, because I will tell you that
like with my kids, my older kids. I have a thirty four year
old and a thirty year old. Like one of the things that I've told
my boy specifically, like when you graduated college, I was like, cash,
cash is like really good. You need to make sure you have cash
on hand, Like when all the shit hits the fan, you gotta make
sure you have some cash. But is that bad advice? Like now I'm
starting to think that's terrible advice. I'm a terrible mother. I gave him
like the worst advice ever, Like, was I terrible mom? Zach the
wrong? So you know, I think, like anything else, it comes
down to amounts and percentages and all that other kind of stuff. Right,
So I think that, and I think there's a lot of good examples to
back this up. I think that for the average family, you know,
if you're able to, I think having five to ten thousand dollars a cash
on hand is not a bad idea, But I think that the one caveat
I would throw in there is that we really need to update what our definition
of a financial disaster is because when we need to look, and I think
the easiest way to do is to look back in history when we talk financial
disasters, I think the number one thing that we're all talking about are like
an eighth nine great depressionary reducts where things drop. I think that we all
need to accept the fact that while that will happen, and as a matter
of fact, I think that you're probably going to look I will be shocked
if you do not see a sharp lead down stock market next year. And
it doesn't mean that has to plummet, but I think giving back the majority
of what it made this year because it's nonsensical and that kind of fits our
outlook anyway. I just I think that you're probably going to be range bound
here for a while, and I you know, you get to the bottom
of the range and everybody's going to freak out the world's ending, and get
to the top of the range, everybody's all excited again, and you just
keep doing it, and we've done it. Is the third time we've done
it. So but I think that everybody needs to adjust to something. Meaning
when we went through COVID, in my opinion, the game changed. And
the reason I say the game changed is the stock market was up sixteen and
a half percent in the same year, where you add a twenty three point
eight percent annualized drop in economic output in a single quarter right during the COVID
shutdown. To put that in perspective, in eighth nine, the Great Financial
Crisis, the economy contracted three point eight percent top to bottom. COVID we
were twenty three point eight in a quarter. Okay, the stock market went
up sixteen percent. Why because they made it rain. You're so far down
the path now, you're not going to see a depression You're not going to
see a stock market that goes down eighty five percent. The fear is a
Zimbabwe type situation. And look, we're not on the edge of that either,
okay. Like so, you know, if we got to that point,
you would see Europe blow up first, you would see China blow up
first. There are other places that are even worse soft than we are.
But we all need to adjust our thinking a little bit and define what is
And the easiest way I think to look at this, you guys, is
what happened in the Great Depression, and what happened in eight oh nine is
called deflation. Right, where the value of a currency goes up versus goods.
Now, it doesn't ever feel good because we all own goods and own
assets, and then by default, if the dollars going up in value,
they're going down. Right. So those are what we've experienced. But what's
really interesting is do you know of another single civilization in the history of mankind
that went away or collapsed because their currency went up too much in value?
Right? The answer is no. Right. What creates societal collapse its currency
collapses, which means what happens to asset prices, They go through the roof.
Right. The best performing stock market in my lifetime has been the Zimbabwe
stock market. I think it's averaged like, I don't like six seven hundred
percent a year. Now. The problem is is that it's currency was depreciating
by eight or nine hundred percent a year, right, So what I'm saying
is we need to redefine it. The government, especially since eight oh nine,
certainly since COVID has changed the rules, they have decided that extended or
protracted or elongated or whatever however you want. Economic downturns are no longer politically
palatable, and we don't care how much money we have to print. We
don't care how much debt we And the simple reason for this is is is
pretty self evident. Meaning if you print a bowload of money and we're seeing
it happen in our and you generate forty year high inflation, you can still
get reelect. But if you allow things to go down in price, and
you allow stock market crashes, they're going to throw you out right. As
long as their nasdak companies and their bitcoins going up, everybody's fine, even
if they're dealing with inflation. So I think that we need to recalculate what
we're looking at. So to answer the question directly, I think having five
to ten thousand dollars cash on hand makes all the sense in the world.
But I look at that a sort of get out of town money, meaning,
you know, don't make it a pile and think about it this way.
You know, we're worried about the collapse of the dollars, so we're
going to pull all of our money out in cash and sit in dollars does
make a lot of sense. Okay, Well, and I know that when
I went to the bank to even like it was such a good deal to
go and ask for my own money. My gosh, I can imagine.
Oh yeah, oh my god. You go into a bank and you ask
for a significant amount of money in cash and it is like they are on
guard and they don't like it, and it's yeah, yeah, yeah,
I know. It's why do you need forty thousand dollars? And I'm like,
because I deposit it, Well, that wasn't anywhere close. Yeah,
even like five even like if you want to get five thousand, like if
from a bank, they if you're trying to do a down payment on something,
or like even for just a huge purchase like a home or a car
or something like that, they don't You're right. They make a big fuss
about it. It takes so much, and you're like, this is my
mother, I know I need a reason actually right right, yeah, yeah,
The reason is because it's Tuesday afternoon and I want my bloody yeah right.
Meanwhile, some guys, waw, some guy in Russia can hack into
your account and get it in like two seconds and you're like, wait a
second, nobody asks to yeah yeah, geez yeah, or or or they
just if they're really smart, they don't even need to hack anymore. They
just need to line themselves with some Ukrainian politicians and they'll just you know,
they'll flow the money in your bank account for you, big right, big
yeah. Yeah. There is there like a percentage though, just for because
people that are listening potentially have income levels all over the place. So is
there like a rule of thumb amount of cash to have on hand that is
a percentage of what you would typically have in a savings account. Not really,
but I would say generally, I think having amount of cash on hand
to facilitate all of your financial needs, including potentially paying bills for a month,
So figuring out what that amount is for a month, because like I
said, we've just we have. I was having this conversation with client earlier
today, so it's fresh in my mind. We just have to change the
way we're thinking and identify the risks properly, meaning it sounds crazy, and
eventually, you know, this dynamic will change, because all dynamics do.
But like I said, we have we the other thing that we need to
fully accept is we do not live in a free market society anymore. Meaning
government has decided that they want and the Federal Reserve has decided that they want
to target asset prices right, which means what it means, it's on a
free market. And what do politicians benefit from They benefit from things going up.
So we've changed policy to match that as well, which is one of
the reasons we've told our clients. Look, I think you need to manage
risk and I think you need to be very careful because of valuations in the
environment that we currently live in. Here's the other thing, me sitting there
saying the stock market isn't going to drop eighty five percent. I don't mean
your account can't, right Like I can show you all kinds of things that
have gone down eighty to ninety percent over the last two years. I'm just
saying. Which is why I think people and it's why it's so pernicious right
now, is the average retail investor is loaded up on the most ridiculous stuff.
And the reason why is because that's the stuff that's performed the best.
So it's drawn them, you know, it's drawn people into it. People
love chasing charts and things like that. So just because I say that that's
not gonnappen to the stock market, and I know there's people that are here
there be like he's a Pollyanna, and I'm like, no, I again,
go back to COVID, right, A twenty three point eight percent hit,
and that's never happened before. That's so that's that's that's you know,
I think the worst quarter in the Great Depression, you were down like six
percent, right, So I mean to put that in context and to sit
there and see that we can take that level of economic shock, we print
a bunch of money and still finish with the stock market up sixteen percent.
People need to realize that. So where we're looking at it, and we're
going to look I think the market's going to give us a lot of opportunities.
And I think next year is going to be one of those opportunities where
things are going to get hit, but it's going to be an opportunity to
buy other good things because the inflationary game is going to keep going on and
keep going on in earnest. So I would say, you know, a
month, a month of cash sitting on hand is a good idea. I
think, and I think that's kind of a backstop. But but do you
know the other thing you don't want to do. Another alternative is not to
sell every you know, every stock or every asset you own and buy a
bunch of roles and sticking in a safe either same issue. So anyway,
Yeah, a month of cash on hand, as I think, is all
you need to do. And then I think the other big important thing you
need to do is just properly manage the risk. And the best way for
people to do that is to make sure that they are following you. Yeah,
so best. So we put out a fifteen minute twenty minute show every
single day called Daily Dots talking about all the important information that's occurred in the
economy they can and then we do our weekly show so they can get all
of that for free, no paywallet. Know Your Risk Radio podcast and we're
on every podcasting site, same place they listen to your guys' podcasts. They
can type in Know your Risk Radio, pull us upto. Awesome, perfect,
fantastic, thank you, thanks so appreciated. We have a wonderful week
and thanks for having me on week. Investment advisory services offered through Trek Financial
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